Before we spend countless hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of BioMarin Pharmaceutical Inc. (NASDAQ:BMRN).
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) was in 41 hedge funds' portfolios at the end of the first quarter of 2019. BMRN investors should pay attention to an increase in enthusiasm from smart money lately. There were 37 hedge funds in our database with BMRN holdings at the end of the previous quarter. Our calculations also showed that bmrn isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to view the latest hedge fund action surrounding BioMarin Pharmaceutical Inc. (NASDAQ:BMRN).
What have hedge funds been doing with BioMarin Pharmaceutical Inc. (NASDAQ:BMRN)?
At Q1's end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BMRN over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) was held by Baker Bros. Advisors, which reported holding $674.2 million worth of stock at the end of March. It was followed by Viking Global with a $455.6 million position. Other investors bullish on the company included Palo Alto Investors, Citadel Investment Group, and venBio Select Advisor.
As aggregate interest increased, key money managers were leading the bulls' herd. Millennium Management, managed by Israel Englander, established the largest call position in BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). Millennium Management had $17.8 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $15.8 million position during the quarter. The following funds were also among the new BMRN investors: Phill Gross and Robert Atchinson's Adage Capital Management, Robert Henry Lynch's Aristeia Capital, and Matthew Tewksbury's Stevens Capital Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) but similarly valued. These stocks are Magna International Inc. (NYSE:MGA), Match Group, Inc. (NASDAQ:MTCH), CMS Energy Corporation (NYSE:CMS), and Vulcan Materials Company (NYSE:VMC). This group of stocks' market values match BMRN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MGA,27,523999,5 MTCH,24,573647,0 CMS,22,488168,1 VMC,48,1767755,7 Average,30.25,838392,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.25 hedge funds with bullish positions and the average amount invested in these stocks was $838 million. That figure was $1909 million in BMRN's case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand CMS Energy Corporation (NYSE:CMS) is the least popular one with only 22 bullish hedge fund positions. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately BMRN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BMRN were disappointed as the stock returned -6.1% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.